Monthly Archives: October 2015

Tax Extenders Redux: Déjà Vu All Over Again

The great commentator—and occasional baseball player—Yogi Berra may have left us behind, but Congress continues to prove his words prophetic.   For yet another year, we are in the fourth calendar quarter awaiting federal tax legislation designed to spur economic activity as of the preceding January.

Last year we followed the saga of the so-called “Tax Extenders” legislation, which addresses tax incentives that expire on December 31 of each year, unless renewed by Congress.  The2014 bill was enacted in mid-December 2014, and expired December 31, 2014.  Although the law applied retroactively to January 1, 2014, taxpayers could not act during the first fifty weeks of the year because it was unclear whether the incentives would become law once again.  The mid-term Congressional elections provided a convenient scapegoat for the delayed enactment, but the bill still did little good.

2015 Tax Extenders legislation is playing out similarly, but the budget, debt ceiling, and Speaker of the House of Representatives vacancy are this year’s scapegoats. Several bills exist which could become law before the end of the year.  As in prior years, the potential Tax Extender laws include special depreciation rules for qualified leasehold, restaurant and retail improvements, 50% bonus depreciation provisions, and first year expensing opportunities for certain capital expenditures. Also included is a reduction in S corporation recognition period for the built-in gains tax from ten years, to five years, but only for transactions closing in the year in which the Tax Extender legislation is in effect.  Potential legislation also includes special incentives for conservation-oriented transactions and charitable donations from IRAs.

We aren’t holding our breath for legislation in the next few weeks, but are hopeful another Tax Extenders bill will pass before December 31, 2015.  If you have a transaction dependent on the legislation, be ready in advance, because you might have only a few weeks to act once the legislation passes.  It will be “late early out there” before you know it.  After that, you will be stuck hoping for another chance in 2016.

Here are links to our prior posts relating to Tax Extenders legislation:

http://blog.williamsparker.com/businessandtax/2014/12/17/with-only-two-weeks-left-for-taxpayers-to-act-2014-tax-extenders-bill-finally-to-become-law-should-you-celebrate-yawn-or-yell/

http://blog.williamsparker.com/businessandtax/2014/11/05/with-republican-election-gains-2014-tax-extenders-legislation-could-boost-capital-expenditures-business-merger-and-acquisition-activity/

http://blog.williamsparker.com/businessandtax/2014/04/30/2014-tax-extenders-legislation-uncertainty-impairs-capital-expenditure-planning-business-acquisitions/

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Applicable Federal Rates for November 2015

The Internal Revenue Code prescribes minimum imputed interest rates and time-value-of-money factors applicable to certain loan transactions and estate planning techniques. These rates are tied formulaically to market interest rates. The Internal Revenue Service updates these rates monthly.

These are commonly applicable rates in effect for November 2015:

Short Term AFR (Loans with Terms <= 3 Years)                                          0.49%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                     1.59%

Long Term AFR (Loans with Terms >9 Years)                                              2.57%

7520 Rate (Used in many estate planning vehicles)                                     2.0%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-15-22.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037